Samsung Network business bets on 5G for growth

February 1, 2019

Samsung Electronics has revealed its strategies to become a prominent player in the telecom network business cashing in on the uncertainties faced by rival Huawei.
South Korea’s Samsung is the fourth largest telecom equipment maker behind rivals Huawei, Nokia, Ericsson and ZTE. Samsung moved to the third position in the third quarter of 2018 in the wake of turmoil faced by China-based ZTE in the US market.

Samsung is betting on 5G network deals to enhance its small share in the telecom equipment market. Samsung is already a major 4G LTE equipment supplier to telecom operator Reliance Jio in India, in addition to mobile service providers in the US and South Korea.

Nokia CEO Rajeev Suri on Thursday said the network supplier is not aiming for substantial growth in revenue in the first half of 2019 because 5G network roll out will be happening in phases.

Samsung in its earnings report said that its mobile network business revenue improved quarter on quarter in the December quarter of 2018. Samsung does not reveal information on revenue from its network business.

The sequential improvement in business performance was due to the supply of equipment to major overseas supplier for LTE expansion and the initial supply of 5G equipment to South Korea and the US.

Samsung’s network business is expecting that the commercial roll out of 5G in South Korea and chip supply equipment for LTE expansion will lift its revenue in 2019. Samsung did not share inputs on its strategies to take on Huawei and ZTE.

“Network business will take a global leadership role by expansion of the 5G equipments for the initial market such as South Korea and the U.S. and lay the foundation for further global business growth,” JongMin Lee – Samsung Mobile Communications said.

Samsung is expecting revenue from 5G to start this year. 5G smartphone revenue will depend on the 5G adoption rate and the adoption timing of both the handset makers and the carriers. Samsung aims to leverage its commercially proven 5G modem to add on new OEM customers, especially in China and the US.

Samsung has been leading the standardization process for 5G. It has secured many 5G-related patents as well. “Our aim is to leverage this to increase market share in 5G compared to our LTE market share,” a Samsung official said during an analyst call.

Samsung also said there will be a strong server memory demand because there are companies that are preparing to adopt Edge servers in advance to prepare for the 5G network rollout after 2020.

“We expect penetration of 5G network to increase rapidly within several years, and this will increase the sales of 5G smartphones and the demand for peripherals, such as IoT devices,” Samsung said.